Posts Tagged ‘money’

Bootstrap Rule of Thumb

August 2nd, 2011

Never buy what you can rent

Never rent what you can barter for

Never barter for what you can borrow

Never borrow what you can get for free

A little help from my friends

July 22nd, 2010

A while ago I mentioned some alternative forms of peer-to-peer financing. Well, I came across a few others lately and am curious if anyone has had experience with them. In contrast to those sites these don’t require repayment but are a mechanism for crowds to donate. The following information just comes from their respective websites-so double check that I read it right before you do anything with them. All of them have some sort of widget you can put on your website of Facebook page.

Kickstarter-Specifically set up to support to creative and artistic endeavors. Each project is reviewed by the team before putting it on the site which is searchable. It is currently run through Amazon’s Payment Services though not affiliated with Amazon. Project organizers offer tiered prizes or gifts for donations. Contributors aren’t charged anything unless the goal is met. It is an all or nothing event. They charge 5% on the funds raised and Amazon takes a little too-so be sure to compensate for that.

Chipin-No review or approval process for the projects or causes. It is run through PayPal and users are charged when they “chip in” and the organizers don’t get the money until they end the chip in event but can keep whatever is collected even if the goal wasn’t reached. No fees besides those charged by PayPal are taken. You can try collecting for up to 365 days

IndieGoGo-This one is open to everyone and everything-no reviews or restrictions. You get to keep everything you raise. They do charge 9% on the funds raised but give you 5% if you reach your goal. You can use PayPal or Amazon Payments.

SellaBand -Focuses on musicians and bands who then get the money when they reach their goals. Another on is called artistShare.

It’s a fun concept that gives hope to anyone willing to dream the impossible dream

Live Long and Bootstrap

October 27th, 2009

Bootstrapping: term used to describe the process of starting a business out of very little or virtually nothing specifically without external funding in exchange for equity.

So you’ve got this great idea and cool people to work with if you only had a little money to get it up and going you’d be set. You can pitch your idea to family and friends and see if they’re willing to donate to the cause. Or you could try to pitch your idea to some investors-angel or venture capital investors. Maybe you could max out your credit cards until you start making a profit and then pay it all off when it starts rolling in. Each scenario has its pluses and minuses. You could also try a small business loan but they frequently want collateral.

Another approach is to try your hand at a new financing model. Peer to peer lending. These include sites like Lending Club, Prosper, and Kiva. They all work a little differently, some better for the investors and others get better rates for the loan applicants. For our purposes we’ll reference Prosper.com.

Basically, you apply for a loan with one of these places and they post it for the peer investors to bid on. The peer investors can loan as little as $25 which in turn is consolidated with others who have done the same until the entire loan has been funded. Then as you pay some closing costs (.5%-3% of the loan) and as you make monthly payments you pay the company who then divides it up amongst all the investors after taking a little shipping and handling fee for them until the loan is paid in full.

The rates can be cheaper than credit cards and easier to get than bank loans. The other cool part is that the interest that you pay goes to actual people who are taking a chance on you not faceless corporations. Does anyone else have any other ideas on how to finance a start-up?

Get Adobe Flash playerPlugin by wpburn.com wordpress themes